Greece clinches deal

ATHENS — Greece and its creditors reached what Brussels called “an agreement in principle” Tuesday on how to implement its third multi-billion-euro bailout, though Germany warned against rushing the deal to meet short-term deadlines.

“There are just one or two very minor details left,” Finance Minister Euclid Tsakalotos told reporters as he left the negotiators’ hotel after marathon talks that lasted through the night. A finance ministry spokesman tweeted “the negotiation has been completed.”

The European Commission, which is negotiating with Athens alongside the European Central Bank, European Stability Mechanism and the International Monetary Fund, was slightly more cautious. It said a technical-level agreement had been reached by the creditors’ team on the ground but “what we don’t have at the moment is a political agreement.”

“Nothing is agreed until everything is agreed,” said Commission spokesperson Annika Breidthardt.

Commission President Jean-Claude Juncker discussed progress with Greek Prime Minister Alexis Tsipras and German Finance Minister Wolfgang Schäuble on Monday and with German Chancellor Angela Merkel and French President François Hollande on Tuesday, she added, without giving details of the content of the phone calls.

Berlin once again expressed concern that Athens was rushing the deal through in order to meet an August 20 repayment deadline with the European Central Bank.

Deputy Finance Minister Jens Spahn, speaking to German TV just before Greek officials said an agreement had been reached, reiterated the position voiced by German officials and lawmakers in recent days that it is more important to be thorough than fast, to ensure that Greece signs up to reform commitments that are sustainable over time.

“It is about a three-year program, this has to be debated thoroughly,” said Spahn. “There appears to be more willingness from their [the Greek] side and the talks seem to be more constructive. But it’s also important to note that this has to be the case for the next three years and not for three days.”

Potential pitfalls

Greece’s new bailout is expected to provide the debt-stricken nation with up to €86 billion in rescue loans over the next three years but demands fresh budget cuts and tax increases from austerity-weary Greeks.

According to a draft of the accord published by newspaper Kathimerini, the government will have to implement reforms including rolling back tax breaks for farmers, phasing out exemptions for early retirement and liberalizing markets and rules for professions like pharmacists and bakers.

Greece has committed to running a primary budget surplus of 0.5 percent in 2016, 1.75 percent in 2017, and 3.5 percent in 2018 – figures some economists consider overly optimistic. Jonathan Loynes, chief European economist at Capital Economics, said that in his view, “the plan rests on initial forecasts for the economy and public finances which are little short of fantasy.”

“There are a number of potential pitfalls that could knock the deal off course in coming months, which would once again raise Grexit worries,” analysts at ABN AMRO wrote in a note to clients, citing recession, towering debts and further austerity measures.

Tsipras, a former student Communist, was elected in January on vows to sweep away hated austerity policies. He has criticized the terms of the bailout agreed at a European summit on July 13, but nevertheless said accepting them was the only way to avert the collapse of the economy and exit from the eurozone.

His next challenge will be to get the bailout through Parliament this week without an even bigger revolt by far-left lawmakers from his ruling Syriza party, which is deeply split over the bailout and threatens his governing coalition.

Members of the party’s Left Platform wing have said they plan to vote against the agreement, putting Tsipras’s parliamentary majority under renewed strain.

However, support from pro-Europe opposition parties — New Democracy, Pasok and To Potami — mean the bailout should pass comfortably.

Passing the bill this week should allow Greece to secure the first tranche of loans in time to meet a roughly €3 billion bond repayment to the ECB on August 20.

Tsipras is widely expected to call an early election in the autumn to shore up his backing in Parliament and some commentators say he might act soon if the bailout vote provokes a deeper rebellion.

“We are saying that the government must not adopt a neo-liberal programme,” Costas Isychos, a founding member of Syriza who rejects the bailout, told POLITICO last week. “We are determined to maintain the moral core of Syriza.”

However, the government has sought to cool speculation about an early election, with a spokeswoman telling reporters on Monday: “The election talk that has been cultivated in recent days is neither beneficial nor does it correspond with reality.”

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Robert

What about the greek farmers subsidies? I remember, that ND and parts of Syriza will not vote for that. And since the IMF will not give money, the europeans have to give more. By the way, since greek has no money the europeans have to give greece the money to pay IMF. Therefore, it doesn´t matter if the IMF gives money or not,